My Real Estate Blog

The revelation that loan servicers were rapidly signing foreclosure documents without even reading them has uncovered a morass of serious paperwork problems. These issues could potentially prevent some foreclosure cases from proceeding and allow delinquent borrowers to stay in their homes indefinitely or wrangle settlements from their servicers.

The whole robo-signing scandal has caused many judges to mistrust what servicers are saying in foreclosure petitions. Many judges will scrutinize filings more closely.

Several major banks have halted their foreclosure proceedings while they review their process and paperwork. However, several, including Bank of America, are ready to continue their cases, saying they are confident that their methods are sound.

But servicers could still hit some big paperwork potholes in answering what seems like the simplest of questions: Who owns the loan and who has the right to foreclose?